Declining solar energy stocks. Here’s how to trade it now

Declining solar energy stocks.  Here’s how to trade it now

Solar stocks were some of the best stocks to own this summer, with names like First Solar (FSLR) and Enphase Energy (ENPH) Leading the charge higher.

These stocks surged more than 140% from their May lows to their recent highs and helped support the Invesco Solar ETF. (tan) higher. These two stocks are the largest holdings in the ETF, with a combined weighting of over 22%.

While the market as a whole is under pressure on Wednesday, solar stocks are taking a hit.

Enphase Energy is down about 13% on the day, while First Solar is down about 6%.

We’ve traded these stocks very well this year so far, so let’s take an updated look at the charts.

Trade Enphase Energy Stock

Shares of Enphase Energy actually traded well in July, but after that, earnings sent that name up. It rose on July 17, gaining more than 17% on the day. It rose again on July 18, gaining more than 7% on the day.

Since then, it has been walking above the $275 level as the stock has been consolidating its recent gains.

With Wednesday’s low, Enphase Energy stock fell right through the $275 level and reached the second level of closing two major gaps, that level at $275.55.

Now in an effort to find a foothold around $250, the bulls will want to see a move back above $257.55. If he can do that, the 10-day moving average from $270 to $275 could get back in the zone again on a rebound.

Otherwise, below $250 could test the $220 area. In that area, we find a 50% retracement from the recent high down to the 2022 low, as well as the second level to fill the gap. Finally, the weekly VWAP scale runs in this area as well.

Trade First Solar Stock

The first solar stock is a little more direct. Stocks have support near the $130 level, but I’m looking for a slightly bigger dip for a better risk/reward setting.

This comes after the stock exploded to new highs this year on Tuesday, but reverses lower on Wednesday.

Specifically, I am looking for a pullback in the $120 to $125 area. We find there are quite a number of levels that could help boost this stock. It includes the 50-day and 10-week moving averages, the daily VWAP scale and the breakout above the 2021 high.


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